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Founder's Message

Founder
MR M.R. JAISHANKAR
CMD
jaishankar-cmd

This issue is coming after a gap of one year. The April issue could not be released due to the 2nd wave of the pandemic and the connected lockdown.

People’s perceptions and attitudes toward life and work have changed a lot over the last 17 months. People and businesses who were able to adapt to the fast changes encountered, have flourished. Those who could not, have unfortunately perished. The impact of the 2nd wave was quite severe on the personal lives of millions of Indians. More than 32 million people contracted the Wuhan Virus and unfortunately, 430 thousand people have died in our country. Worldwide figures: 207 million affected & nearly 4.4 million people have passed away.

The numbers are only growing by the day, even though multiple vaccines are available. For 7,800 million people to be vaccinated twice, it can take another year or two. Luckily, more than 500 million Indians have been administered at least one dose of the vaccine. As a result, if there is a third wave of the virus, the impact is likely to be less severe than the earlier 2 waves. Only time will tell. But, as individuals, one needs to strictly follow all precautions as recommended by the health authorities for their own good.

During these uncertain times, Brigade was able to sail through the troubled waters reasonably well. While our Hospitality and Retail segments were badly affected, the Residential real estate business performed remarkably well by posting the highest sales since the inception of the Group in October 1986. Office leasing sentiments are also affected quite a bit, although the Indian software sector has had exceptional times due to their sheer resilience and ability to keep up their commitments to clients.

The concept of life and work has also undergone tremendous change. Work From Home (WFH) in the financial and technology sectors is a shining example of success, wherever remote working is possible. E-commerce has made life convenient to the technologically savvy population. It has already revolutionised the retail shopping sector. It will have a big impact in the years ahead on the traditional ‘Kirana’ stores and even Shopping Malls. Lockdowns to contain COVID-19 have reinforced the importance of owning a ‘roof over one’s head’, that too a comfortable, spacious one. With reduced expenditure & increased personal savings due to lockdowns, and real estate developers coming up with attractive price & payment schemes, the affordability factor has increased at all levels, resulting in improved demand for housing. This has been the saving grace for developers. Even with all the challenges faced during the last 17 months, we have been able to complete 15 projects with an area of 12.40 million square feet, including our marquee project, World Trade Center (WTC) Chennai. During the same period, we launched 14 projects with an area of 11.30 million square feet including Brigade Citadel in Hyderabad, and Brigade Residences at WTC Chennai.

A feather in the cap is the recognition by the international body, Great Place to Work Institute in association with the Economic Times, for the 11th year in a row - placing Brigade amongst the Top 100 Best Places to Work in the Country - the only real estate developer in the country to receive such an honour. Despite inadequate support to business and industry by the Central & State Government, the Indian Corporate Sector has shown a lot of resilience, thereby presumably, helping wipe out the 7.5% negative GDP of 2020. Good monsoon across the country, in general, has played its part. But the concerns of MSME sectors and small businesses remain. This means by the end of March 2022, India’s financial position may get back to March 2020 status. With the loss of 2 valuable years of growth, it would be a miracle of sorts if our country can reach the targeted GDP of 5 trillion USD by 2024-25. Reaching the USD 5-7 trillion mark is essential for the country. This will ensure that per capita income goes up to USD 4-5k from the present USD 2k. Only when the per capita income goes beyond USD 4-5k, can the MIG population hope to have good disposable income, which in turn will give a boost for the next stage of growth. This would be very similar to what happened in China over the last 20 years. The Central Government has taken up several structural reforms during the past couple of years to help the Indian industry grow and at the same time supporting the farmers and the poorer sections of the society. One hopes these structural reforms will start yielding results soon. Stock indices of BSE & NSE have gone through the roof on this expectation. FII & SIP fund inflows have added fuel to the fire.

With this hope, as we enter the 75th year of Independence, we can expect ‘Tomorrow to be brighter than Today’.

Wishing our readers good health and safety.


—Jaishankar CMD, Brigade.

 

ARCHIVE INDEX
"A few thoughts…" is a column that our CMD Mr M.R. Jaishankar writes regularly for our house journal Brigade Insight. A few of his columns are reproduced here."
December 2008

The most significant happening in the last quarter is the manner in which Barack Obama was elected as the President of the world's biggest economy, on the plank of promise of CHANGE. For me it was a moving experience to watch the final stages of the US election process and to listen to the high quality speeches. If one reads Obama's Audacity of Hope, one can realise what a clear thinking person he is. It certainly brings hope of a better tomorrow for the world as his views are full of sense.

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By and large, the last quarter has seen the stock markets world over getting battered, India not being an exception. Once the December quarter results start pouring in, the mood is unlikely to become better. The spectre of falling rates, increasing unemployment and tougher visa conditions in the western economies is not the fodder stock markets like.

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Unlike the bold 'bail out' packages of the US and European economies, the stimulus package/s announced by the Indian Government are at best knee-jerk reactions which are unlikely to have a significant positive impact. What is required is an extraordinary response to an extraordinary situation. Also required is a major initiative to spend US $50 to $100 billion on infrastructural projects like building highways—completing the golden quadrilateral and networking other roads that will generate large employment and improve the core sectors. Why not a 'Great Wall of India' bordering our problematic neighbours, which will also help in reducing infiltration? The three most important sectors of the old economy are agriculture, automobiles and construction. In the new economy unquestionably it is the IT sector. All these sectors require great support if the government is even half serious about improving the state of the economy.

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The November terrorist attack in Mumbai is the most heinous and boldest ever, exposing all the chinks in our armour. It has made the citizens angry, dumbfounded and helpless. Many political leaders were behaving like Nero when Mumbai was under attack.

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If the government does not ACT now by taking measures similar to what United States took post 9/11, I do not know what will make them move. The time has come to stop barking and start biting when driven to do so.

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In an otherwise gloomy quarter, the highlight event for Brigade Group is the recognition from Forbes Asia as one of the 200 Best Under a Billioncompanies in the Asia Pacific region. It is a recognition of the hard and result-oriented work of the entire Brigade team for the past two decades. My sincere thanks to the valuable contribution by our Board Members, the entire staff of Brigade Group and our associates.

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As the curtain comes down on what can be called as the most forgettable year in the recent times (from the economic stand-point), let me sincerely wish all the readers a brighter, happier and peaceful 2009.



September 2008

There is no dearth of headline making news in the last few months—worsening US financial crisis; Nuclear agreement; Terrorist attacks; New BJP Govt. in Karnataka; High inflation; Volatility in crude price; natural calamities & impending Presidential Election in the United States.

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It is amazing & unbelievable to see century old institutions which are revered in the financial circles—Bears Sterns; Lehman Brothers; AIG; Merrill Lynch; Washington Mutual, Wachovia—drop like 9 pins. Who knows whether the worst is over or yet to come? Greed to make more and more money with casino like operations & throwing caution to the wind has resulted in this financial catastrophe of humungous proportions, affecting each of us in some degree or the other. The magnitude of the problem is difficult to comprehend.

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The uncertainty of life has increase with increased terrorist activities. This is extremely sad. Before it is too late, it is time for us as a nation, as corporates & as responsible family members to take all required security measures to avoid being victims of terrorist attacks. The whole meaning of safe neighbourhoods and safe cities has changed with the ease at which fundamentalists are able to operate. If the government desires to ensure the safety of its citizens and desires to maintain the secular nature of the country, then it needs to take tough measures without bothering about the political consequences of such decisions.

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Full kudos to our 'Sing is king' Prime Minister for finally taking bold steps to conclude the much delayed Nuclear deal to enable us to produce Nuclear Power to meet our energy needs, without which our industrialization & economic growth will be severely affected.

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High lending rates by financial institutions have curtailed the demand for residential units and other luxury items. This can lead to a negative chain reaction by reduced demand for services and core sector products like steel, cement etc. This is also likely to bring down the country's GDP growth from a very healthy 8%+ to a modest 5-6% growth. For the economy to bounce back, it will take quite sometime. Even then, it would be wise for genuine buyers to take their decision to buy properties (but on floating interest rates, if one desires to borrow). Otherwise, year on year inflation of 8-12% p.a. will only jack up the prices of real estate in the medium to long term.

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A silver lining for non-residential buyers, in an otherwise gloomy scenario is that the rupee has depreciated by 20%+ making it attractive to buy properties and to make investments in India. Better to strike gold when the opportunity exists.

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With single party rule (BJP) in Karnataka, expectations for improved infrastructures & governance were running high. But ground realities seem to be different. Action on many long pending people is yet to be taken. Citizens are still hopeful of positive steps by the government.

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Impending Presidential election in the United States in November '08, and parliamentary elections in India (March '09), will be interesting to discuss and watch. They will certainly keep the media busy.

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Let me hope the festival season of Dussera & Diwali will bring some sparkle to our lives.



April 2008

Though the year 2008 started off well for the economy, the 'subprime' crisis in the United States and the short-term liquidity crisis (due to the Reliance Power stock issue) knocked the bottom out of the Indian Stock Market. This resulted in the sudden drop of Sensex by 30 per cent, as if to confirm the reality of globalisation and inter-dependence of the economies. The old adage—'If America catches cold, the whole world sneezes'—appears to still be true.

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Unfortunately, realty stocks were one of the worst hit and Brigade Enterprises' stocks were no exception. Only sustained, good performance can change the perception of the industry.

Although the Indian economy is doing well by and large, and a growth rate of 7+ per cent may still be possible during 2008, its inherent strength is under question. 

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High economic growth results in higher inflation. Although some amount of inflation is acceptable, there is no consensus among economists on the acceptable percentage. In an election year, inflation is a touchy subject. Isn't moderate inflation better than stagflation?

In the law of averages, details get hidden. While the general inflation may be 7 per cent, in certain sectors like construction industry, it is much more. The recent unprecedented 50-60 per cent jump in steel prices was a shocker. So also the salary jumps in the sector, which has overtaken the rates of software industry (this might make more students opt for civil engineering field, instead of the fancied computer science). All this is making the developer community think of introducing an escalation clause in the agreements, with a formula linked to the wholesale price index of the RBI. Otherwise, it will be impossible to absorb the cost increases during a typical 18-36 months' project period, that too after giving hefty discounts for pre-launch and introductory bookings. 

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Election fever in Karnataka is on a high! Kannadigas certainly deserve a single-party government and a better deal. The negative effect of the coalition government is there for all to see. Bangalore is losing its pre-eminent status as the best city in the country. One should pray that a single party will come to power in assembly elections in May. (But God helps those who help themselves). It is important that citizens should exercise their franchise by voting for the right party/candidate.

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Brigade has posted fairly good results for the year ended 31 March 2008. We will be launching a few medium-sized projects in the months ahead, and are gearing up to launch a few large projects in Bangalore, Mysore and Mangalore. It is high time the master plan for the Inter-national Airport Planning Area is released by the government. Otherwise, it will lead to unplanned growth and unauthorised structures. No point in 'locking the stables after the horses have bolted'.



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